Here's what I did -- Seems to have worked:
1. Download PREF SETTER
here
2. Be sure Mail.App is quit. Using PREF SETTER open the file com.apple.mail.plist in your Home/Library/Preferences folder
3. Scroll down to "PreferPlainText" -- more than likely this is set to 'True'
4. Click on 'True' to set it to 'False'
5. Save file and quit Pref Setter.
6. Open Mail and hopefully all should be fine again